youtube

An article of the Financial Times on the 9th of April reveals that some of Europe’s leading telecoms groups, Telefonica, France Telecom and Deutsche Telekom claim that Google has to start paying them for the use of their infrastructure for the Google’s services, mainly for Youtube. The high bandwidth needed for services like Youtube makes the telecommunication companies invest more and more money in upgrading their infrastructures, without offering them the profits needed in order to cover the expenses for the upgrades. A return in the investments they make is vital for their growth and success, so the sharing of Google’s online advertising revenue with the telecoms groups seems to be the solution to the problem. At least that is what the telecommunications companies ask Google to do.

I have posted on this blog the problem the Mobile Services companies faced in the UK by the wide use of smartphones which increased the need of higher capacity in central London. There was another case which came out the last days, according to which the services provided through the infrastructure influenced the infrastructure itself. At&T will upgrade its network in order to cope with the new iPhone device coming out in summer 2010 (this investment is mainly done because Verisson Wireless is going to give the iPhone devices in the US market from summer onwards).

The three aforementioned cases may not seem connected to each other, their common characteristic though is the connection between the services provided though the infrastructure, and the investments done for the infrastructure in order to cope with the services provided. The Google/telecoms groups case adds another constrain to that connection, where the company offering services over an infrastructure (usually adding value to the infrastructure for the users to use it) may has to give part of its revenue to the company owning the infrastructure.

On the 12th of January an article was published on the Official Google Blog, titled “A new approach to China” through which David Drummond, Corporate Development and Chief Legal Officer, states that Google is going to consider whether it will withdraw its presence from China due to hacking/phishing attacks targeting its systems. The purpose of the attacks was the access Gmail accounts of users who are advocates of human rights in China. The attacks also targeted at least twenty other large companies from a wide range of businesses–including the Internet, finance, technology, media and chemical sectors. McAfee vise president of threat research, Dmitri Alperovitch, while talking about the attacks he said that they totally change the threat model because of the unprecedented tactics used that combined encryption, stealth programming and a previously unknown hole in Internet Explorer 6.

David Drummond states that Google will reconsider whether it will comply from now onwards with the Chinese laws which ask for certain restrictions over the results the Google.cn returns and as mentioned before, its presence in China closing its offices in the country. The China Daily article titled China seeks clarity on Google’s intentions criticizes that move, raising concerns about the 700 employees the company has in Beijing while also questioning whether Google has to think whether it can be flexible enough to adapt to China instead of working in the US way which is characterized as non-flexible.

Google’s move is thought to be significant, and many free-speech and human rights groups hope that many other companies will take a similar stand. So, Google gained the support of those groups, it is going to lose the $600 million (estimated by JP Morgan for this year) revenue gained from the country and off course its presence in one of the most developing countries in terms of Internet growth (the Internet users number increased from 10 million to 340 million in a decade). One reason though for Google’s move can be the losing of the search-market battle inside China to the domestic brand Baidu.

Throughout the presence of Google in China, there were several cases in which the government would block services outside the country, sometimes also blocking Youtube which is based outside China. One case is described in this Guargian article, were the government blocked access to Google services in June 2009, amongst which Gmail in order for the authorities to warn Google to scale back its search operations. The main reason the authorities used for blocking Google, was that it provided links to pornographic websites through its search engine.

A Washington Post article titled “Google vs. China” also connects the Google case with the Obama administration which has been slow to embrace the cause of Internet freedom. The case is thought to be both human rights related and also a trade issue because Beijing makes it difficult for foreign companies to compete the domestic ones. Secretary of State Hillary Rodham Clinton also issued a statement on the 12 of January saying the Chinese government would be asked about the cyber-attacks reported by Google.